New figures show Scotland’s public finances are recovering from the coronavirus pandemic faster than the UK as a whole.
The latest Government Expenditure and Revenue Scotland (GERS) statistics show Scotland’s deficit fell by 10.3% – compared to a drop of 8.4% for the UK.
Revenue rose to £73.8bn, up a record £11.1bn from the previous year, while public spending fell by £900m to £97.5bn.
Deputy First Minister and temporary Finance Secretary John Swinney said: “Today’s figures show Scotland’s fiscal position is recovering faster than the UK’s, with a huge fall in the annual deficit thanks to the largest increase in revenues on record.
“This is before the full impact of the rise in oil prices that we’ve seen more recently, which is likely to see Scotland’s deficit fall faster than the UK’s again next year, with oil and gas revenue set to grow to £13bn this year.
“The figures also highlight how the UK’s response to the cost crisis is being built on Scotland’s natural resources, not least with its windfall tax on the North Sea.
“But even without North Sea receipts, the record revenue generated was sufficient to cover all day-to-day devolved spending as well as all social security spending in Scotland, including the state pension.”
GERS describes Scotland’s current fiscal position under current constitutional arrangements, with 74% of revenue and 37% of spending reserved to the UK Government.
Swinney added: “In the first full financial year since Brexit, the GERS figures show the economic harm of leaving the EU is driving up borrowing in the UK and contributing to the UK deficit being one of the largest in Europe.
“Even in the midst of an energy crisis, the UK as a whole is benefiting from Scotland’s natural wealth – which is why Scotland can expect its deficit to fall further in the future.”
Scottish Labour's finance spokesperson Daniel Johnson commented: “The focus of every politician in Scotland must be on tackling the cost of living crisis and today's GERS statistics plainly show how the people of Scotland benefit financially from our United Kingdom.
“The figures confirm, yet again, that Scotland has an increased level of public spend relative to its tax base - that gives fiscal room that is vitally needed as we tackle the cost of living crisis - independence would require tax increases or spending cuts at a time when these actions would shatter households as their bills spiral.“
The net fiscal balance is the difference between total revenue and total public sector expenditure including capital investment. The GERS figures show that in 2021-22 Scotland’s net fiscal balance was a deficit of 12.3% of GDP, or £23.7bn.
The primary objective of GERS is to estimate a set of public sector accounts for Scotland through analysis of official UK and Scottish Government finance statistics. The publication and is produced independently of Scottish ministers and has been assessed by the UK Statistics Authority.
Struan Stevenson, chief executive of pro-union group Scottish Business UK, commented: “If this autumn’s Supreme Court judgement is set to tell us why the SNP government can’t hold a competent referendum next year, today’s GERS figures come as a timely reminder of why they shouldn’t have been trying.
“Despite the Scottish Government’s attempt to spin the 2021/22 GERS figures as supportive of their case for separation, they showed that total Scotland-related public sector expenditure rose to £97.5bn, while income from taxes fell to £73.8bn - that leaves a gap of £23.7bn that had to be filled by a fiscal bailout from Westminster.
“On this basis, at a time when public anxiety over the cost-of-living and soaring energy bills is skyrocketing, millions of Scots will be wondering why a fresh bout of constitutional upheaval would be anything but a bad idea.”
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